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In the event you’re a sole proprietor or impartial contractor, there’s an excellent likelihood you’ve used your Social Safety quantity (SSN) to conduct enterprise. Whether or not you’re submitting taxes, making use of for a enterprise bank card or different normal enterprise actions, sole proprietors usually have to make use of a SSN when there isn’t an alternate.Sadly, utilizing your SSN to do enterprise opens you as much as the chance of id theft. As a substitute of utilizing your SSN, think about signing up for an employer identification quantity (EIN) with the IRS to guard your self.What’s an Employer Identification Quantity?EINs are nine-digit numbers assigned to companies by the IRS to allow them to simply establish taxable entities. Companies like firms and restricted legal responsibility corporations (LLCs) are normally required to make use of EINs so the IRS can establish them. However many sole proprietors can skate by with out them and utilizing a SSN as an alternative.Sole proprietors are usually required to make use of an EIN in the event that they:Rent employeesOpen a Keogh or solo 401(ok) retirement planBuy or inherit a enterprise that operates as a sole proprietorshipForm a partnership or LLCIf you’re a one-person operation with no plans to interact in any of the actions listed above, you possibly can in all probability go with out an EIN. However it’s necessary to notice that EINs provide your id a stage of safety as nicely.How EINS Can Assist Stop Id TheftIf you carry out providers to a shopper, you usually should present them an figuring out quantity, like an SSN, if you fill out a W-9. Whenever you present your SSN, you don’t have any management over what occurs to it, how the shopper protects it or who at your shopper’s group can entry it. If stolen, your SSN can be utilized to commit id theft, file fraudulent tax returns and extra.It’s sensible to maintain your SSN as protected as doable. EINs come in useful as a result of they aren’t linked to your SSN. Whenever you acquire an EIN, you should use it rather than your SSN if you file tax returns, submit paperwork to purchasers and extra. On this means, you possibly can keep away from sharing your SSN with purchasers and different entities as a lot as doable.Learn how to Get an EINIf your principal enterprise is positioned in the US or U.S. territories and you’ve got a legitimate SSN, you possibly can apply for an EIN on-line with the IRS. You may also fill out type SS-4 and despatched it to the IRS through mail. As quickly because the IRS offers you an EIN, you should use it to open financial institution accounts, file tax returns by mail, apply for enterprise licenses and extra.It’s good to wait two weeks earlier than your EIN turns into a part of the everlasting document, after which you’ll be able to file an digital return, make an digital cost or go an IRS Taxpayer Identification Quantity matching program.
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